10Q: Achates Power Reinvents the Engine

Title: Achates Power's Two-Stroke Diesel engine Credit: Photograph courtesy of Achates Power Achates Power has revisited a century-old concept of how to remake the internal combustion automobile engine so it’s cheaper, has fewer emissions and uses less fuel. Photograph courtesy of Achates Power Close

Title: Achates Power's Two-Stroke Diesel engine Credit: Photograph courtesy of Achates... Read More

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Title: Achates Power's Two-Stroke Diesel engine Credit: Photograph courtesy of Achates Power Achates Power has revisited a century-old concept of how to remake the internal combustion automobile engine so it’s cheaper, has fewer emissions and uses less fuel. Photograph courtesy of Achates Power

Imagine the commercial delivery truck of the future -- powered by a silent electric engine and emitting fresher air than it takes in. Now keep imagining, because for the next few decades, the reality is that roads will more likely be dominated by the same internal-combustion vehicles our grandparents drove.

In the meantime, Achates Power has revisited a century-old concept of how to remake the internal combustion automobile engine so it’s cheaper, has fewer emissions and uses less fuel. It may not be the future you imagined, but sometimes the best new ideas are actually old ones.

Achates's two-stroke diesel engine has two pistons per cylinder, one more than traditional engines, that pump in opposite directions. The engine structure was invented in the 1890s, but subsequent versions used too much oil and released too much smog to meet modern standards. Compared with engines currently on the road, Achates' prototype lowers nitrogen oxide emissions 30 percent and boosts fuel efficiency 20 percent.

Achates Chief Executive Officer David Johnson recently spoke with Bloomberg News transportation reporter Mark Clothier.

Q: These engines have existed for a while but fell out of favor, in part because of oil use and emissions. What changed?
A: In the 1930s and '40s, they didn't have modern engine computers, common-rail fuel injectors, state-of-the-art turbochargers. This is the founding idea of Achates: Let's take all this technology, tools and hardware being applied to conventional four-stroke engines and let’s apply it to the two-stroke diesels from the 1930s and '40s. Let's modernize that engine.

Q: What was the reaction in the industry when you started back in 2004?
A: The blanket statement from most of the industry was to say, 'That won't work.' We've applied our 53 engineers since 2004 to prove that the common thinking was wrong and that not only does it work, it works very well. We've shown an opposed piston, two-stroke compression ignition engine can not only meet emissions standards but demonstrate vastly superior fuel efficiency. And we think our engines will be cheaper.

Q: How much cheaper?
A: Engines have crankshafts, camshafts, connecting rods, a crankcase and cylinder heads. With our architecture, you delete that sub-system. You end up with an engine that's 10 to 15 percent cheaper than a conventional engine, with 20 percent higher fuel efficiency while meeting 2010 EPA and Euro 6 emissions.

Q: Do you have paying customers?
A: Yes. Unfortunately because of an agreement, I can't tell you much about it. We've gone around the world with our technology, and the world has come to our doorstep to go through our data, and the feedback has been very positive.

Q: When did you get your first customer?
A: Just recently, this quarter. It was the culmination of work that's gone on over a long period of time. When you go to change the world there's a lot of skepticism to get past. These are the building blocks of getting to a point where you're doing commercial business.

Q: What's your business model? How does Achates make money?
A: For now, joint-development agreements. We're developing engines for our customers' applications, taking our technology and developing in our labs, turning it into full-up engines that go into real applications for demonstration.

Q: When do you expect your engines to go into production?
A: The second half of this decade. When you look at the commercial vehicle fuel-economy regulations that are required by 2018, our timing is quite good.

Q: Do you expect the greater interest to be for commercial vehicles or passenger?
A: There are various applications, but the interest is most intense with regard to commercial vehicles, because they use so much fuel. Think about [heavy-duty] Class 8 trucks in the U.S. A single truck is driven 120,000 miles per year and gets, on average, 6 miles to a gallon. That's $80,000 at current prices, so a 15 percent savings is real money, plus the environmental benefit.

Q: So why does anyone say no?
A: There's no one answer. Some people are focused on certain technological development paths and they think their plans are robust. Companies never put all their eggs in one basket.

Q: Does your engine fit easily into vehicles or would the structure of the vehicle need to be modified?
A: It would fit. There is in fact a difference in shape because of our engine architecture. We have two pistons in a row and every other engine in a truck has just one piston in a row. But because our engine is a two-stroke and has a power density advantage, the engine can be smaller -- in heavy truck, medium truck and light-duty vehicles -- and in every instance without having to re-architect the vehicle. That's a really important factor. You have to fit into the existing ecosystem.

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